NFLX - Moving in a Strong Up Trend

NFLX - BUY


NFLX is one of the rare stocks that has been holding up well since the beginning of the market's major down trend in May. Since the month of February, NFLX has been trending above its 20 day MA and most of the time towards its upper Bollinger Band. Only twice and briefly during the month of May did NFLX break below the 20 day MA. However, it quickly rebounded at the end of the month to resume its trend. One sign of strength is seeing the Stochastic trend in the 80-100 level. Although it briefly broke that trend in May, NFLX is now back around these levels. I do expect a little pullback from NFLX sooner rather than later, but only a minor one bringing it towards the 20 day MA. NFLX is a BUY, but it would be perhaps wiser to wait for it to pullback a little towards its 20 day MA and seeing it bounce back up before taking a long position. Based on the current chart, NFLX is definitely not a stock I would short. Whenever you decide to take a long or short position, even for the short term, it is always best to go with the major trend, and NFLX major trend is currently up.

MGM - Bottom?

MGM - WAIT

When we look at MGM's daily chart we can see that MGM has been moving down in a major down trend since the beginning of May below the 20 day MA. This past Monday, MGM traded
below its 200 day MA for the first time since August 2009. On Wednesday, MGM tried to recover its losses and move back above its 200 day MA but failed and closed lower. MGM is now again just below its 200 day MA around $11.60 and will likely attempt again to move back above its 200 day MA. Despite the very bearish signal of MGM trading below its 200 day MA for the entire week, it may have bottomed and we should get a definite answer next week. The fact is that MGM has higher lows for the past 4 trading sessions which gives MGM the potential to drive back up the 200 day MA. MGM is currently a WAIT for a break back above the 200 day MA which may coincide with the break of the 20 day MA as well. Until MGM manages to break back above these two critical MAs, I would stay on the sidelines. With that being said MGM does have relatively decent support around the $10.50 level. However, if MGM does fail again next week to move back above the 200 day MA, I will consider this as a resumption of the down trend and therefore issue a SELL SIGNAL. One important thing to note is that although MGM has not given us a clear signal yet, the Dow Jones did close above its 20 day MA for the first time since the beginning of this major down trend. If the Dow Jones can manage to hold up and move higher, MGM will most likely follow along and move higher. Taking a long position with MGM at this level is a gamble, but one that is relatively safe with a stop loss of around -8%. However, two clear signals of a resumption of the down trend would be first to see MGM fail to move above its 200 day MA and then to close below this week's lows and below the $10.50 support level. If this support level is broken, MGM could accelerate very quickly down towards $9.00.

Dow Jones - Still Waiting on the Sidelines

Dow Jones - WAIT


Since the beginning of the month of May, the Dow Jones has been trading in a major down trend. However during past few trading sessions the Dow Jones has started to show support around the critical 10000 support level. In fact for the for the past 7-8 trading sessions, the Dow Jones has been trending sideways between 9900 and 10250. Despite showing some support around 10000, I still advise to WAIT on the sidelines as the market is still relatively volatile despite seeing a little more stability lately. Keep in mind that although the Dow Jones has jumped up over 200 points today that the Dow Jones has yet to have 2 consecutive positive trading sessions since the beginning of this major down trend at the start of May. I currently have only one long position which was taken after seeing the Dow Jones hold up above 10000. The next signs I will be looking for to confirm a reversal and a potential new major up trend, would be first to see the Dow Jones close up for 2 consecutive days and then to see it jump above 10250 and 10400, above its 20 day MA. The moment the Dow Jones manages to do these 2 things, I will consider this to be a confirmation of the reversal of the trend and potentially the beginning of a new major up trend. The MACD is starting to move up and getting close to breaking above the signal line, which is somewhat promising to see the Dow Jones' trend reverse back up. Based on the current conditions, I do believe we will have a relief rally sooner rather than later, however I doubt we will be hitting new highs for the year. The most likely and optimistic scenario would be to see the Dow Jones move back towards the peak of 11200 to only see it reverse back down. The current major monthly trend is down, while the major yearly trend is sideways and this will remain true until the Dow Jones either breaks down sharply below 9900-10000 or break up above 11200.